THE AGENCY MAZE
Choose Your Agent,  Before They Choose You!

In Nevada, there are essentially two types of real estate agencies available to Home Buyers:  Exclusive Buyer Agencies, like Buyer’s Brokerage, and Traditional  Listing Agencies.

Because they offer different types of agency relationships, the Home Buyer is advised to understand the legal differences between these two agencies.

Remember that your choice of a real estate agency can greatly impact the outcome of your real estate transaction.

Exclusive Buyer Agencies, as already explained, represent only Buyers. This practice enables them to provide 100% loyalty to Home Buyers - 100% of the Time.  

Traditional Listing Agencies, on the other hand, represent Buyers, Sellers or both the Buyer and the Seller in the same transaction, thus creating the potential for conflicts of interest. There are several types of Agents you may encounter when using the Traditional Listing Agency.  These are:

Seller’s Agent



What you don’t know about the Seller’s Agent could cost you thousands of dollars.

Too many people today rush into home buying without adequate preparation.

They begin their home search by contacting real estate agents advertising homes for sale on the internet,  on local TV channels,  in newspapers,  magazines or by way of “Open Houses”  or  “For Sale” signs posted on the property.  However, what they don’t realize is that these Agents work exclusively for the Seller.

What every Home Buyer should know about the Seller’s Agent.

By listing properties for sale, Seller’s Agents become legally and ethically obligated to act solely in the best interests of the Seller at all times, excluding all other interests, including their own self-interests.   

Seller’s Agents must present the Seller’s property in the most favorable manner and negotiate the highest possible price for the Seller, not the lowest price for you, the Buyer.

Seller’s Agents are duty-bound to keep the Seller’s secrets confidential.

Therefore, speaking to the Seller’s Agent is no different from speaking to the Seller.  Anything you say to the Seller’s Agent can and will be used against you in the course of negotiations.

Because they represent the Seller, Seller’s Agents:

• Cannot advise you on what price to offer for the Seller’s property other than to recommend that you offer the asking (listed) price.  
• Cannot advise you if the Seller’s property is overpriced, or if the Seller’s terms are unreasonable.                
• Cannot disclose the Seller’s original purchase price.
• Cannot assist you in determining the property’s true market value.
• Cannot disclose to you the price or terms the Seller will accept.
• Cannot tell you how long or how many times the property has been on the market.
• Cannot point out the shortcomings of a property.
• Cannot discuss any concerns you may have about the property. 
• Cannot point out any potential defects or problems.
• Cannot disclose to you that a home is a bad investment.
• Cannot advise you which home to buy if you’re deciding between two.
• Cannot point out the reasons not to buy.
• Cannot tell you if there have been any offers or counteroffers and for how much.
• Cannot attend inspections or appraisals as your representative.
• Cannot negotiate a contract for you.
• Cannot attend the closing as your representative.
• Cannot be your advocate.
• Cannot give you “counsel” or “advice”’ regarding any aspect of your transaction, or assist you in any way that would be contrary to the Seller’s best interests.

As a Buyer, you need to understand that the Seller’s Agents can show and sell you  a home, but they are legally and ethically obligated to represent the Seller’s best interests, not yours.  

Remember, if you buy a home through the Seller’s Agent, you are without representation.
 You’re totally on your own!  

Dual Agent

The term Dual Agency is not defined in the Nevada Code or Regulations. The statute does not use the term “Dual Agent”.  But a licensee acting in that capacity is defined  as one “acting for more than one party to a real estate transaction” (NRS 645.252).  

A real estate Broker who represents both the Buyer and the Seller in the same transaction is a Dual Agent. In acting for these parties, the Broker has a conflict of interest. In a Dual Agency, the duty of confidentiality conflicts with the duty  of disclosure.   

Designated (Assigned) Agent

In Nevada, the managing Broker may “assign” one affiliate licensee to represent the Seller-Client and a different licensee within the same real estate office to represent the Buyer-Client in the same transaction.  

Therefore, two licensees from the same real estate brokerage end up representing opposite sides in a single real estate transaction.     

This means one real estate office promises to get the highest price for their Seller client, and the lowest price for their Buyer client, in the sale/ purchase of the same property.  In addition, both Clients are promised complete loyalty, full disclosure, advocacy and no conflict of interest.  

Designated Agency representation is analogous to one law firm representing both the plaintiff and the defendant in the same lawsuit.  

This type of agency practice is financially very advantageous to the traditional real estate agencies as they receive a commission from both sides of the transaction, and at the same time “minimize” their liability by “avoiding” Dual Agency situations.   

Due to the single office work environment it would be difficult, if not impossible to maintain the security of transaction files and confidentiality of the Buyer’s or Seller’s personal or financial information.  The consequences of this agency practice are obvious.   

Considering the fact that in Nevada the Salespersons have no authority to act independently of their employing Broker, would you wonder what role does the Broker play in a Designated Agency situation?  What happens if both Designated Agents need the Broker’s assistance and advice?   

 

Buyer’s Agent

TRUST, BUT VERIFY!      

In current real estate practice, nearly every sales agent working for the Traditional Listing Agency will eagerly agree to act as your Buyer Agent.  Obviously, they want your business.  

However, they won’t tell you that if the home you wish to view or purchase is listed  with their brokerage, you will end up in “Dual” or “Designated” Agency. That will necessarily occur, since they have already established a client-relationship with the Seller, as well as with you.   

This situation is most likely to occur if  “your”  Buyer Agent works for a real estate  company that has a lot of listings in the marketplace.   

This concept of buyer representation is viewed by pro-consumer real estate professionals and consumer advocates as a bait-and-switch tactic used by the Traditional Listing Agencies to sell their own listings and thereby collect the entire listing commission, known within the real estate brokerage industry as  the “double dip”.  

First, the buyer becomes sold on the idea of “exclusive buyer representation” then later in the process is switched to a different working relationship for an  in-house sale.  

CAUTION:  As a Buyer, you are advised not to sign any legal document that would authorize your agent to end full fiduciary responsibilities to you during  your transaction and represent other parties with interests conflicting to yours. Otherwise, the confidential information that you have disclosed to that Agent  could be used against you once the agency switch occurs.